GM sheds jobs in Europe, beats forecasts

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General Motors said its third-quarter performance shows that steps it has taken to fix troubled business units are working. Four of the company’s five units were profitable, with Europe the only exception.

By Tom Krisher
Associated Press
November 01, 2012

DETROIT — Shares of General Motors surged Wednesday after the company announced big job cuts in Europe and reported third-quarter earnings that were far better than Wall Street expected.

The Detroit company said it has cut 2,300 jobs in Europe this year and wants to trim 300 more, part of a larger plan to reduce costs and raise revenue in the struggling region with new vehicles that are more appealing to buyers.

GM rode North American profits, big improvements in South America, and strong earnings in international areas outside of China to make $1.48 billion, or 89 cents per share for the quarter. That’s down from $1.73 billion, or $1.03 per share, a year earlier. Excluding one-time items, GM made 93 cents per share, beating analysts’ estimates by 33 cents.

Still, there are signs of trouble. Profit in North America, GM’s most lucrative market, fell 17 percent from July through September. The company’s US market share dropped more than 2 percentage points to 17.6 percent, and its US sales increase of 3.4 percent for the year lags overall market growth of 14.5 percent. In Europe, where GM hasn’t made money in a dozen years, it lost $478 million before taxes. That’s $186 million worse than a year earlier.

Yet GM said its third-quarter performance shows that steps it has taken to fix troubled business units are working. Four of the company’s five units were profitable, with Europe the only exception.

‘‘It stems from our geographic diversity, strong brands and the financial rigor we are instilling in the business,’’ chief executive Dan Akerson said.

Fourth-quarter pretax earnings should be about the same as last year’s $1.1 billion, the company said.

In Europe, GM made rosier predictions than other automakers. The company expects to break even before taxes by the middle of the decade. Losses this year are expected to run from $1.5 billion to $1.8 billion, about double the figure from 2011. Next year, losses should be slightly less.

The job cuts, which have come mainly through voluntary departures and early retirements, are part of a plan to cut $300 million in costs this year and an additional $500 million from 2013 to 2015, said vice chairman Steve Girsky, who is leading the restructuring. More job cuts could be made in the future depending on sales.

GM also is cutting inventory and low-profit rental car sales in Europe, and it plans to eliminate a third shift now working at its Eisenach plant in Germany next year. It’s also reviewing whether its transmission plant in Strasbourg, France, will stay open. It’s negotiating the closure of its Bochum plant in Germany, and it plans to cut Opel Astra production from three plants to two.

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